Powell’s Comments Suggest Further Rate Hikes; Franchise Finance Q&A; Hyatt’s Insights into Hotel Demand & CAVA IPO
Weekly Dashboards
It has finally dawned on the market that the Fed plans more interest rate hikes, like Powell has been saying all along, thus pushing down stock prices while inflating yields. While this realization has helped stabilize the US$, it has badly pressured commodity prices during the week ended 6/22/23. Seems like all this volatility would push the VIX fear gauge through the roof, but just the opposite is true… In any case, market participants should be carefully considering the impact of higher rates on a government debt load set to balloon to $46 trillion by 2033 as outlined in this post.
Government Spending Analysis
The traditional way to assess a government’s leverage level is to calculate debt/GDP. We propose a new leverage ratio, government debt/household wealth to further assess the effectiveness of government spending.
NoBull’s Actionable Intelligence Newsletter provides succinct, value-added research covering key corporate & economic insights germane to consumer spending which drives 68% of GDP. Our Restaurant Research clients have been relying on us to provide them with analyses on $1B+ restaurant chains since 2000, now trust us to cover the entire consumer landscape for you.
This Week's 15-Second Research Posts
The Fed is looking hard for signs of a slowing economy, and unfortunately, retail sales are not cooperating.
Don’t let the Fed pause fool you, they plan for more 2H23 tightening before starting to ease in 2024 & beyond. Given an uncertain lag between tightening & economic decline, it seems that the Fed is comfortable with the real possibility of driving negative GDP shrinkage to get to that mystical 2% inflation rate.
In this post, we provide a concise analysis of the state of franchise finance from a seasoned lender.
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CAVA shares were priced at approximately 32x EV/EBITDA before rocketing to 84x on the first day of trading (dwarfing Wingstop’s EV/EBITDA multiple by +58%)!
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While extra covid SNAP payments were ended in March 2023, the current benefits remain much higher than 2019 levels & it is notable that the average payment of $386 in March 2023 was +60% higher than the $241 payment in October 2019 (much higher than the rate of inflation).
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During a recent investor conference, Hyatt Hotel discussed its view on the status of its new construction pipeline, the role of the smaller banks in financing its projects & its view on the financial health of smaller banks.
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Hyatt Hotels’ global room night demand is still down -4.5% compared to its pre-covid level. This is notable as core demand drivers (GDP & nonresidential fixed investment) are up +15% to +20%. This suggests strong growth prospects as demand normalizes.
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While Kroger’s promotional pricing, personalized offers & fuel savings work together to create an overall value comparable to everyday low-price providers, these savings come with a much more personalized experience.
Abbreviated Report
2022 total restaurant industry market share for the $1B+ Chains declined sharply (-2.2% to 33.9%), representing the lowest level in at least 20 years as smaller chains and independent restaurants recaptured lost market share post-covid.